South Plains Financial, Inc. Reports Fourth Quarter and Year-End 2023 Financial Results

LUBBOCK, Texas, Jan. 26, 2024 (GLOBE NEWSWIRE) -- South Plains Financial, Inc. (NASDAQ:SPFI) (“South Plains” or the “Company”), the parent company of City Bank (“City Bank” or the “Bank”), today reported its financial results for the quarter and year ended December 31, 2023.

Fourth Quarter 2023 Highlights

• Net income for the fourth quarter of 2023 was $10.3 million, compared to $13.5 million for the third quarter of 2023 and $12.6 million for the fourth quarter of 2022.
• Diluted earnings per share for the fourth quarter of 2023 was $0.61, compared to $0.78 for the third quarter of 2023 and $0.71 for the fourth quarter of 2022.
• Average cost of deposits for the fourth quarter of 2023 increased to 224 basis points, compared to 207 basis points for the third quarter of 2023 and 97 basis points for the fourth quarter of 2022.
• Net interest margin, calculated on a tax-equivalent basis, was 3.52% for the fourth quarter of 2023, compared to 3.52% for the third quarter of 2023.
• Loans held for investment grew $20.6 million, or 2.8% annualized, during the fourth quarter of 2023 as compared to September 30, 2023.
• Nonperforming assets to total assets were 0.14% at December 31, 2023, compared to 0.12% at September 30, 2023 and 0.20% at December 31, 2022.
• Return on average assets for the fourth quarter of 2023 was 0.99% annualized, compared to 1.27% annualized for the third quarter of 2023 and 1.27% annualized for the fourth quarter of 2022.
• Tangible book value (non-GAAP) per share was $23.47 as of December 31, 2023, compared to $21.07 as of September 30, 2023.
• The consolidated total risk-based capital ratio, Common Equity Tier 1 risk-based capital ratio, and Tier 1 leverage ratio at December 31, 2023 were 16.74%, 12.41%, and 11.33%, respectively. These ratios significantly exceeded the minimum regulatory levels necessary to be deemed “well-capitalized”.

Full Year 2023 Highlights

• Total assets were $4.20 billion at December 31, 2023, compared to $3.94 billion at December 31, 2022.
• Full year net income of $62.7 million in 2023, compared to $58.2 million in 2022.
• Diluted earnings per share of $3.62 in 2023, compared to $3.23 in 2022.
• Loans held for investment grew $266.1 million, or 9.7%, during 2023.
• Tangible book value (non-GAAP) per share of $23.47 at December 31, 2023, compared to $19.57 at December 31, 2022.
• Return on average assets of 1.54% for the full year 2023, compared to 1.47% for 2022.
• The Bank’s wholly-owned subsidiary, Windmark Insurance Agency, Inc. (“Windmark”), was sold in the second quarter of 2023 for $36.1 million, resulting in a gain, net of related charges and taxes, of $22.9 million.

Curtis Griffith, South Plains’ Chairman and Chief Executive Officer, commented, “While our industry faced significant challenges through the year, we delivered strong results which demonstrates not only the strength of our franchise but also our ability to take advantage of opportunities that lie ahead to drive growth and shareholder value. First and foremost, our community-based deposit franchise grew modestly through the year, despite the significant dislocation that occurred following the failures of Silicon Valley Bank and Signature Bank in the first quarter. Loan demand also remained healthy across our markets while the Fed steadily raised their benchmark interest rate to what is expected to be a peak for the cycle this past December. For the full year, we delivered 9.7% loan growth which highlights both the strength of the Texas economy and our efforts to expand our lending platform with a focus on our metro markets. The credit quality of our loan portfolio also remained strong as we ended 2023 with our classified loans remaining at the lowest level since the start of the pandemic.”

Mr. Griffith concluded, “We also completed the sale of Windmark for a pre-tax gain of $33.8 million. The gain that we recorded positioned us to strategically sell $56 million of investment securities at a loss in a tax efficient manner and reinvest those proceeds into higher yielding loans. Given our strong capital and liquidity position, our Board of Directors authorized a $15 million stock repurchase program in May, which has been exhausted. We repurchased 218 thousand shares during the fourth quarter and a total of 686 thousand shares during 2023. Through the year, our Board has believed that our shares have traded below intrinsic value and we have been aggressive in repurchasing our stock.”

Results of Operations, Quarter Ended December 31, 2023

Net Interest Income

Net interest income was $35.2 million for the fourth quarter of 2023, compared to $35.7 million for the third quarter of 2023 and $36.3 million for the fourth quarter of 2022. Net interest margin, calculated on a tax-equivalent basis, was 3.52% for the fourth quarter of 2023, compared to 3.52% for the third quarter of 2023 and 3.88% for the fourth quarter of 2022. The average yield on loans was 6.29% for the fourth quarter of 2023, compared to 6.10% for the third quarter of 2023 and 5.59% for the fourth quarter of 2022. The average cost of deposits was 224 basis points for the fourth quarter of 2023, which is 17 basis points higher than the third quarter of 2023 and 127 basis points higher than the fourth quarter of 2022.

Interest income was $57.2 million for the fourth quarter of 2023, compared to $56.5 million for the third quarter of 2023 and $46.2 million for the fourth quarter of 2022. Interest income increased $708 thousand in the fourth quarter of 2023 from the third quarter of 2023, which was comprised of an increase of $1.7 million in loan interest income offset by a decrease of $945 thousand in interest income on other interest-earning assets. The growth in loan interest income was primarily due to an increase of $13.5 million in average loans outstanding and a rise of 19 basis points in the yield on loans. The decline in interest income on other interest-earning assets was predominately a result of decreased liquidity maintained at the Federal Reserve Bank of Dallas. Interest income increased $11.0 million in the fourth quarter of 2023 compared to the fourth quarter of 2022. This increase was primarily due to an increase of average loans of $273.6 million and higher market interest rates during the period, resulting in growth of $9.2 million in loan interest income.

Interest expense was $22.1 million for the fourth quarter of 2023, compared to $20.8 million for the third quarter of 2023 and $9.9 million for the fourth quarter of 2022. Interest expense increased $1.2 million compared to the third quarter of 2023 and $12.2 million compared to the fourth quarter of 2022, primarily as a result of significantly higher short-term interest rates on interest-bearing liabilities, with the increase being mainly comprised of interest expense on deposits. Additionally, interest-bearing deposits grew during the fourth quarter of 2023 versus the compared periods, which also contributed to the higher interest expense.

Noninterest Income and Noninterest Expense

Noninterest income was $9.1 million for the fourth quarter of 2023, compared to $12.3 million for the third quarter of 2023 and $12.7 million for the fourth quarter of 2022. The decrease from the third quarter of 2023 was primarily due to a decrease of $2.9 million in mortgage banking revenues, mainly from a reduction in the fair value of the mortgage servicing rights assets as interest rates that affect the value began falling late in the fourth quarter. Additionally, originations of mortgage loans held for sale declined $11.8 million due to typical seasonality. The decrease in noninterest income for the fourth quarter of 2023 as compared to the fourth quarter of 2022 was primarily due to a reduction of $2.8 million in income from insurance activities due to the sale of Windmark and a decrease of $1.1 million in mortgage banking revenues as originations of mortgage loans held for sale declined $35.0 million due to higher mortgage interest rates during the period, which has slowed mortgage activity.

Noninterest expense was $30.6 million for the fourth quarter of 2023, compared to $31.5 million for the third quarter of 2023 and $32.7 million for the fourth quarter of 2022. The $892 thousand decrease from the third quarter of 2023 was largely the result of a reduction of $732 thousand in personnel costs, which predominately came from lower mortgage personnel costs as mortgage loan originations slowed as well as lower health care insurance costs. The decrease in noninterest expense for the fourth quarter of 2023 as compared to the fourth quarter of 2022 was primarily driven by a reduction of $783 thousand in Windmark-related expenses due to its sale and a reduction of approximately $1.2 million in mortgage noninterest expenses due to the decline in mortgage loan originations.

Loan Portfolio and Composition

Loans held for investment were $3.01 billion as of December 31, 2023, compared to $2.99 billion as of September 30, 2023 and $2.75 billion as of December 31, 2022. The $20.6 million, or 2.8% annualized, increase during the fourth quarter of 2023 as compared to the third quarter of 2023 occurred primarily in commercial real estate loans, partially offset by a reduction in consumer auto loans. As of December 31, 2023, loans held for investment increased $266.1 million, or 9.7% year over year, from December 31, 2022, primarily attributable to strong organic loan growth, occurring mainly in commercial real estate loans.

Deposits and Borrowings

Deposits totaled $3.63 billion as of December 31, 2023, compared to $3.62 billion as of September 30, 2023 and $3.41 billion as of December 31, 2022. Deposits increased by $5.5 million, or 0.6% annualized, in the fourth quarter of 2023 from September 30, 2023. As of December 31, 2023, deposits increased $219.7 million, or 6.5% year over year, from December 31, 2022. Noninterest-bearing deposits were $974 million as of December 31, 2023, compared to $1.05 billion as of September 30, 2023 and $1.15 billion as of December 31, 2022. Noninterest-bearing deposits represented 26.9% of total deposits as of December 31, 2023. The quarterly change in total deposits was mostly flat, reflecting a decline in noninterest-bearing deposits of $72.1 million and an increase in interest-bearing deposits of $77.6 million. The year-over-year increase in total deposits is primarily a result of growth of $152 million in brokered deposits in the second and third quarters of 2023 given the overall focus in the banking industry on improving liquidity, as well as organic deposit growth. In December 2023, $12.4 million in subordinated notes with a weighted-average interest rate of 5.75% were redeemed.

Asset Quality

The Company recorded a provision for credit losses in the fourth quarter of 2023 of $600 thousand, compared to negative $700 thousand in the third quarter of 2023 and $248 thousand in the fourth quarter of 2022. The provision during the fourth quarter of 2023 was largely attributable to organic loan growth and net charge-off activity during the quarter.

The ratio of allowance for credit losses to loans held for investment was 1.41% as of December 31, 2023, compared to 1.41% as of September 30, 2023 and 1.43% as of December 31, 2022.

The ratio of nonperforming assets to total assets as of December 31, 2023 was 0.14%, compared to 0.12% as of September 30, 2023 and 0.20% as of December 31, 2022. Annualized net charge-offs were 0.08% for the fourth quarter of 2023, compared to 0.05% for the third quarter of 2023 and 0.09% for the fourth quarter of 2022.

Capital

Book value per share increased to $24.80 at December 31, 2023, compared to $22.39 at September 30, 2023. The increase was primarily driven by an increase in accumulated other comprehensive income (“AOCI”) of $32.9 million and $8.2 million of net income after dividends paid. The increase in AOCI was attributed to the after-tax increase in fair value of our available for sale securities, net of fair value hedges, as a result of decreases in long-term market interest rates during the period.

Conference Call

South Plains will host a conference call to discuss its fourth quarter and year-end 2023 financial results today, January 26, 2024, at 10:00 a.m., Eastern Time. Investors and analysts interested in participating in the call are invited to dial 1-877-407-9716 (international callers please dial 1-201-493-6779) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call and conference materials will be available on the Company’s website at https://www.spfi.bank/news-events/events.

A replay of the conference call will be available within two hours of the conclusion of the call and can be accessed on the investor section of the Company’s website as well as by dialing 1-844-512-2921 (international callers please dial 1-412-317-6671). The pin to access the telephone replay is 13743667. The replay will be available until February 9, 2024.

About South Plains Financial, Inc.

South Plains is the bank holding company for City Bank, a Texas state-chartered bank headquartered in Lubbock, Texas. City Bank is one of the largest independent banks in West Texas and has additional banking operations in the Dallas, El Paso, Greater Houston, the Permian Basin, and College Station, Texas markets, and the Ruidoso, New Mexico market. South Plains provides a wide range of commercial and consumer financial services to small and medium-sized businesses and individuals in its market areas. Its principal business activities include commercial and retail banking, along with investment, trust and mortgage services. Please visit https://www.spfi.bank for more information.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with generally accepted accounting principles in the United States (“GAAP”). These non-GAAP financial measures include Tangible Book Value Per Share, Tangible Common Equity to Tangible Assets, and Pre-Tax, Pre-Provision Income. The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s financial position and performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures.

We classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.

A reconciliation of non-GAAP financial measures to GAAP financial measures is provided at the end of this press release.

Available Information

The Company routinely posts important information for investors on its web site (under www.spfi.bank and, more specifically, under the News & Events tab at www.spfi.bank/news-events/press-releases). The Company intends to use its web site as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD (Fair Disclosure) promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, investors should monitor the Company’s web site, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.

The information contained on, or that may be accessed through, the Company’s web site is not incorporated by reference into, and is not a part of, this document.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect South Plains’ current views with respect to future events and South Plains’ financial performance. Any statements about South Plains’ expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. South Plains cautions that the forward-looking statements in this press release are based largely on South Plains’ expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond South Plains’ control. Factors that could cause such changes include, but are not limited to, the impact on us and our customers of a decline in general economic conditions and any regulatory responses thereto; potential recession in the United States and our market areas; the impacts related to or resulting from recent bank failures and any continuation of the recent uncertainty in the banking industry, including the associated impact to the Company and other financial institutions of any regulatory changes or other mitigation efforts taken by government agencies in response thereto; increased competition for deposits and related changes in deposit customer behavior; changes in market interest rates; the persistence of the current inflationary environment in the United States and our market areas; the uncertain impacts of ongoing quantitative tightening and current and future monetary policies of the Board of Governors of the Federal Reserve System; the effects of declines in housing prices in the United States and our market areas; increases in unemployment rates in the United States and our market areas; declines in commercial real estate prices; uncertainty regarding United States fiscal debt and budget matters; cyber incidents or other failures, disruptions or breaches of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber attacks; severe weather, natural disasters, acts of war or terrorism, geopolitical instability or other external events; regulatory considerations; competition and market expansion opportunities; changes in non-interest expenditures or in the anticipated benefits of such expenditures; the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learnings; potential increased regulatory requirements and costs related to the transition and physical impacts of climate change; current or future litigation, regulatory examinations or other legal and/or regulatory actions; and changes in applicable laws and regulations. Additional information regarding these risks and uncertainties to which South Plains’ business and future financial performance are subject is contained in South Plains’ most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q on file with the SEC, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of such documents, and other documents South Plains files or furnishes with the SEC from time to time, which are available on the SEC’s website, www.sec.gov. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements due to additional risks and uncertainties of which South Plains is not currently aware or which it does not currently view as, but in the future may become, material to its business or operating results. Due to these and other possible uncertainties and risks, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized and readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. Any forward-looking statements presented herein are made only as of the date of this press release, and South Plains does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, new information, the occurrence of unanticipated events, or otherwise, except as required by applicable law. All forward-looking statements, express or implied, included in the press release are qualified in their entirety by this cautionary statement.

Contact:	Mikella Newsom, Chief Risk Officer and Secretary
	(866) 771-3347
	investors@city.bank

Source: South Plains Financial, Inc.

South Plains Financial, Inc.
Consolidated Financial Highlights - (Unaudited)
(Dollars in thousands, except share data)

	As of and for the quarter ended
	December 31, 2023				September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022
Selected Income Statement Data:
Interest income	$	57,236			$	56,528			$	50,821			$	47,448			$	46,228
Interest expense		22,074				20,839				16,240				13,133				9,906
Net interest income		35,162				35,689				34,581				34,315				36,322
Provision for credit losses		600				(700	)			3,700				1,010				248
Noninterest income		9,146				12,277				47,112				10,691				12,676
Noninterest expense		30,597				31,489				40,499				32,361				32,708
Income tax expense		2,787				3,683				7,811				2,391				3,421
Net income		10,324				13,494				29,683				9,244				12,621
Per Share Data (Common Stock):
Net earnings, basic		0.63				0.80				1.74				0.54				0.74
Net earnings, diluted		0.61				0.78				1.71				0.53				0.71
Cash dividends declared and paid		0.13				0.13				0.13				0.13				0.12
Book value		24.80				22.39				23.13				21.57				20.97
Tangible book value (non-GAAP)		23.47				21.07				21.82				20.19				19.57
Weighted average shares outstanding, basic		16,443,908				16,842,594				17,048,432				17,046,713				17,007,914
Weighted average shares outstanding, dilutive		17,008,892				17,354,182				17,386,515				17,560,756				17,751,674
Shares outstanding at end of period		16,417,099				16,600,442				16,952,072				17,062,572				17,027,197
Selected Period End Balance Sheet Data:
Cash and cash equivalents		330,158				352,424				295,581				328,002				234,883
Investment securities		622,762				584,969				628,093				698,579				701,711
Total loans held for investment		3,014,153				2,993,563				2,979,063				2,788,640				2,748,081
Allowance for credit losses		42,356				42,075				43,137				39,560				39,288
Total assets		4,204,793				4,186,440				4,150,129				4,058,049				3,944,063
Interest-bearing deposits		2,651,952				2,574,361				2,473,755				2,397,115				2,255,942
Noninterest-bearing deposits		974,201				1,046,253				1,100,767				1,110,939				1,150,488
Total deposits		3,626,153				3,620,614				3,574,522				3,508,054				3,406,430
Borrowings		110,168				122,493				122,447				122,400				122,354
Total stockholders’ equity		407,114				371,716				392,029				367,964				357,014
Summary Performance Ratios:
Return on average assets (annualized)		0.99%				1.27%				2.97%				0.95%				1.27%
Return on average equity (annualized)		10.52%				14.01%				31.33%				10.34%				14.33%
Net interest margin (1)		3.52%				3.52%				3.65%				3.75%				3.88%
Yield on loans		6.29%				6.10%				5.94%				5.78%				5.59%
Cost of interest-bearing deposits		3.14%				2.93%				2.45%				2.03%				1.52%
Efficiency ratio		68.71%				65.34%				49.39%				71.42%				66.35%
Summary Credit Quality Data:
Nonperforming loans		5,178				4,783				21,039				7,579				7,790
Nonperforming loans to total loans held for investment		0.17%				0.16%				0.71%				0.27%				0.28%
Other real estate owned		912				242				249				202				169
Nonperforming assets to total assets		0.14%				0.12%				0.51%				0.19%				0.20%
Allowance for credit losses to total loans held for investment		1.41%				1.41%				1.45%				1.42%				1.43%
Net charge-offs to average loans outstanding (annualized)		0.08%				0.05%				0.05%				0.09%				0.09%

	As of and for the quarter ended
	December 31 2023				September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022
Capital Ratios:
Total stockholders’ equity to total assets		9.68	%			8.88	%			9.45	%			9.07	%			9.05	%
Tangible common equity to tangible assets (non-GAAP)		9.21	%			8.40	%			8.96	%			8.54	%			8.50	%
Common equity tier 1 to risk-weighted assets		12.41	%			12.19	%			12.11	%			11.92	%			11.81	%
Tier 1 capital to average assets		11.33	%			11.13	%			11.67	%			11.22	%			11.03	%
Total capital to risk-weighted assets		16.74	%			16.82	%			16.75	%			16.70	%			16.58	%

(1) Net interest margin is calculated as the annual net interest income, on a fully tax-equivalent basis, divided by average interest-earning assets.

South Plains Financial, Inc.
Average Balances and Yields - (Unaudited)
(Dollars in thousands)

	For the Three Months Ended
	December 31, 2023										December 31, 2022
	Average Balance			Interest			Yield/Rate				Average Balance			Interest			Yield/Rate
Assets
Loans	$	3,019,228		$	47,903			6.29	%		$	2,745,595		$	38,695			5.59	%
Debt securities - taxable		560,143			5,563			3.94	%			601,411			4,868			3.21	%
Debt securities - nontaxable		157,341			1,032			2.60	%			214,011			1,418			2.63	%
Other interest-bearing assets		255,454			2,963			4.60	%			184,471			1,546			3.32	%
Total interest-earning assets		3,992,166			57,461			5.71	%			3,745,488			46,527			4.93	%
Noninterest-earning assets		156,541										182,088
Total assets	$	4,148,707									$	3,927,576
Liabilities & stockholders’ equity
NOW, Savings, MMDA’s	$	2,201,190			16,894			3.04	%		$	1,844,551			7,231			1.56	%
Time deposits		357,067			3,325			3.69	%			305,098			1,027			1.34	%
Short-term borrowings		3			-			0.00	%			4			-			0.00	%
Notes payable & other long-term borrowings		-			-			0.00	%			-			-			0.00	%
Subordinated debt		73,740			981			5.28	%			75,938			1,013			5.29	%
Junior subordinated deferrable interest debentures		46,393			874			7.47	%			46,393			635			5.43	%
Total interest-bearing liabilities		2,678,393			22,074			3.27	%			2,271,984			9,906			1.73	%
Demand deposits		1,021,091										1,234,570
Other liabilities		59,808										71,615
Stockholders’ equity		389,415										349,407
Total liabilities & stockholders’ equity	$	4,148,707									$	3,927,576
Net interest income				$	35,387									$	36,621
Net interest margin (2)								3.52	%									3.88	%

(1) Average loan balances include nonaccrual loans and loans held for sale.
(2) Net interest margin is calculated as the annualized net interest income, on a fully tax-equivalent basis, divided by average interest-earning assets.

South Plains Financial, Inc.
Average Balances and Yields - (Unaudited)
(Dollars in thousands)

	For the Twelve Months Ended
	December 31, 2023										December 31, 2022
	Average Balance			Interest			Yield/Rate				Average Balance			Interest			Yield/Rate
Assets
Loans	$	2,924,473		$	176,627			6.04	%		$	2,612,161		$	137,957			5.28	%
Debt securities - taxable		570,655			21,590			3.78	%			594,405			15,010			2.53	%
Debt securities - nontaxable		185,205			4,901			2.65	%			216,216			5,733			2.65	%
Other interest-bearing assets		223,152			9,973			4.47	%			318,862			3,675			1.15	%
Total interest-earning assets		3,903,485			213,091			5.46	%			3,741,644			162,375			4.34	%
Noninterest-earning assets		176,495										222,544
Total assets	$	4,079,980									$	3,964,188
Liabilities & stockholders’ equity
NOW, Savings, MMDA’s	$	2,117,985			55,423			2.62	%		$	1,889,888			13,013			0.69	%
Time deposits		321,205			9,564			2.98	%			327,289			3,989			1.22	%
Short-term borrowings		84			5			5.95	%			4			-			0.00	%
Notes payable & other long-term borrowings		-			-			0.00	%			-			-			0.00	%
Subordinated debt		75,458			4,018			5.32	%			75,874			4,050			5.34	%
Junior subordinated deferrable interest debentures		46,393			3,276			7.06	%			46,393			1,640			3.54	%
Total interest-bearing liabilities		2,561,125			72,286			2.82	%			2,339,448			22,692			0.97	%
Demand deposits		1,069,280										1,189,730
Other liabilities		71,102										66,182
Stockholders’ equity		378,473										368,828
Total liabilities & stockholders’ equity	$	4,079,980									$	3,964,188
Net interest income				$	140,805									$	139,683
Net interest margin (2)								3.61	%									3.73	%

(1) Average loan balances include nonaccrual loans and loans held for sale.
(2) Net interest margin is calculated as the annualized net interest income, on a fully tax-equivalent basis, divided by average interest-earning assets.

South Plains Financial, Inc.
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)

	As of
	December 31, 2023				December 31, 2022
Assets
Cash and due from banks	$	62,821			$	61,613
Interest-bearing deposits in banks		267,337				173,270
Securities available for sale		622,762				701,711
Loans held for sale		14,499				30,403
Loans held for investment		3,014,153				2,748,081
Less:  Allowance for credit losses		(42,356)				(39,288)
Net loans held for investment		2,971,797				2,708,793
Premises and equipment, net		55,070				56,337
Goodwill		19,315				19,508
Intangible assets		2,429				4,349
Mortgage servicing assets		26,569				27,474
Other assets		162,194				160,605
Total assets	$	4,204,793			$	3,944,063
Liabilities and Stockholders’ Equity
Noninterest-bearing deposits	$	974,201			$	1,150,488
Interest-bearing deposits		2,651,952				2,255,942
Total deposits		3,626,153				3,406,430
Subordinated debt		63,775				75,961
Junior subordinated deferrable interest debentures		46,393				46,393
Other liabilities		61,358				58,265
Total liabilities		3,797,679				3,587,049
Stockholders’ Equity
Common stock		16,417				17,027
Additional paid-in capital		97,107				112,834
Retained earnings		345,264				292,261
Accumulated other comprehensive income (loss)		(51,674)				(65,108)
Total stockholders’ equity		407,114				357,014
Total liabilities and stockholders’ equity	$	4,204,793			$	3,944,063

South Plains Financial, Inc.
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands)

	Three Months Ended						Twelve Months Ended
	December 31, 2023			December 31, 2022			December 31, 2023			December 31, 2022
Interest income:
Loans, including fees	$	47,895		$	38,694		$	176,598		$	137,954
Other		9,341			7,534			35,435			23,214
Total interest income		57,236			46,228			212,033			161,168
Interest expense:
Deposits		20,219			8,258			64,987			17,002
Subordinated debt		981			1,013			4,018			4,050
Junior subordinated deferrable interest debentures		874			635			3,276			1,640
Other		-			-			5			-
Total interest expense		22,074			9,906			72,286			22,692
Net interest income		35,162			36,322			139,747			138,476
Provision for credit losses		600			248			4,610			(2,619)
Net interest income after provision for credit losses		34,562			36,074			135,137			141,095
Noninterest income:
Service charges on deposits		1,844			1,680			7,130			6,829
Income from insurance activities		37			2,823			1,515			10,826
Mortgage banking activities		1,671			2,777			13,817			31,370
Bank card services and interchange fees		3,167			3,090			13,323			12,946
Gain on sale of subsidiary		—			—			33,778			—
Other		2,427			2,306			9,663			14,174
Total noninterest income		9,146			12,676			79,226			76,145
Noninterest expense:
Salaries and employee benefits		17,977			18,703			79,377			86,323
Net occupancy expense		3,856			4,085			16,102			15,987
Professional services		1,509			1,945			6,433			9,740
Marketing and development		880			1,223			3,453			3,614
Other		6,375			6,752			29,581			28,425
Total noninterest expense		30,597			32,708			134,946			144,089
Income before income taxes		13,111			16,042			79,417			73,151
Income tax expense		2,787			3,421			16,672			14,911
Net income	$	10,324		$	12,621		$	62,745		$	58,240

South Plains Financial, Inc.
Loan Composition
(Unaudited)
(Dollars in thousands)

	As of
	December 31, 2023			December 31, 2022
Loans:
Commercial Real Estate	$	1,081,056		$	919,358
Commercial - Specialized		372,376			327,513
Commercial - General		517,361			484,783
Consumer:
1-4 Family Residential		534,731			460,124
Auto Loans		305,271			321,476
Other Consumer		74,168			81,308
Construction		129,190			153,519
Total loans held for investment	$	3,014,153		$	2,748,081

South Plains Financial, Inc.
Deposit Composition
(Unaudited)
(Dollars in thousands)

	As of
	December 31, 2023			December 31, 2022
Deposits:
Noninterest-bearing deposits	$	974,201		$	1,150,488
NOW & other transaction accounts		562,066			350,910
MMDA & other savings		1,722,170			1,618,833
Time deposits		367,716			286,199
Total deposits	$	3,626,153		$	3,406,430

South Plains Financial, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(Dollars in thousands)

	For the quarter ended
	December 31, 2023				September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022
Pre-tax, pre-provision income
Net income	$	10,324			$	13,494			$	29,683			$	9,244			$	12,621
Income tax expense		2,787				3,683				7,811				2,391				3,421
Provision for credit losses		600				(700)				3,700				1,010				248
Pre-tax, pre-provision income	$	13,711			$	16,477			$	41,194			$	12,645			$	16,290

Efficiency Ratio
Noninterest expense	$	30,597			$	31,489			$	40,499			$	32,361			$	32,708
Net interest income		35,162				35,689				34,581				34,315				36,322
Tax equivalent yield adjustment		225				229				303				302				299
Noninterest income		9,146				12,277				47,112				10,691				12,676
Total income		44,533				48,195				81,996				45,308				49,297
Efficiency ratio		68.71%				65.34%				49.39%				71.42%				66.35%
Noninterest expense	$	30,597			$	31,489			$	40,499			$	32,361			$	32,708
Less: Windmark transaction and related expenses		—				—				(4,532)				—				—
Less:  net loss on sale of securities		—				—				(3,409)				—				—
Adjusted noninterest expense		30,597				31,489				32,558				32,361				32,708
Total income		44,533				48,195				81,996				45,308				49,297
Less:  gain on sale of Windmark		—				(290)				(33,488)				—				—
Adjusted total income		44,533				47,905				48,508				45,308				49,297
Adjusted efficiency ratio		68.71%				65.73%				67.12%				71.42%				66.35%

	As of
	December 31, 2023				September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022
Tangible common equity
Total common stockholders’ equity	$	407,114			$	371,716			$	392,029			$	367,964			$	357,014
Less:  goodwill and other intangibles		(21,744)				(21,936)				(22,149)				(23,496)				(23,857)
Tangible common equity	$	385,370			$	349,780			$	369,880			$	344,468			$	333,157
Tangible assets
Total assets	$	4,204,793			$	4,186,440			$	4,150,129			$	4,058,049			$	3,944,063
Less:  goodwill and other intangibles		(21,744)				(21,936)				(22,149)				(23,496)				(23,857)
Tangible assets	$	4,183,049			$	4,164,504			$	4,127,980			$	4,034,553			$	3,920,206
Shares outstanding		16,417,099				16,600,442				16,952,072				17,062,572				17,027,197
Total stockholders’ equity to total assets		9.68%				8.88%				9.45%				9.07%				9.05%
Tangible common equity to tangible assets		9.21%				8.40%				8.96%				8.54%				8.50%
Book value per share	$	24.80			$	22.39			$	23.13			$	21.57			$	20.97
Tangible book value per share	$	23.47			$	21.07			$	21.82			$	20.19			$	19.57